Why video game layoffs, closures, and mergers keep happening

Today, we’re talking about the state of the video game industry, which is honestly kind of all over the place. We don’t talk a lot about video games here on Decoder, but we should do more of it. Games are an enormous slice of both the tech and media industries. Here in the US, according to the Entertainment Software Association (ESA) — the big industry trade group — more than 212 million people played games last year, and they spent more than $47 billion on the games and the content inside of them.

A lot of those games get announced here in June, which is absolutely hype season for pretty much the entire video game industry. We’re about to hear about a lot of very cool projects. After the next few days, almost every major game maker will have announced what’s on their slate for this year and beyond. 

But behind the flashy trailers and release dates, there’s something of a crisis: tens of thousands of workers in every part of the video game industry have been laid off since 2022. This year alone, there have already been more than 10,000 layoffs in video games, and we’re not even halfway through the year yet. Dozens of studios have closed, and countless projects have ended before we ever even got to hear about them. 

It feels like a grim time to be in the business of making games, even though the art of video game design is flourishing. Huge global publishers and tiny indie studios alike are facing these financial pressures, and it doesn’t seem to be letting up anytime soon.

So, if sales are great, where did this enormous pressure on the business come from? How is the math working out so badly if there’s so much interest from consumers and players?

I invited Verge video game reporter Ash Parrish on the show to break this down and explain what’s happening in gaming and what these shifts — from a business, culture, and labor perspective — can tell us about what might happen next.